The Magic Number

One … million dollars.” This moment of misguided extortion was one of the finest in Austin Powers – Dr. Evil, all pinkies and giggles and scars, gloating and demanding this puny sum from an assembly of world leaders, convinced he was taking them for all they were worth. He’d been cryogenically frozen for 30 years, so it was an honest mistake: A million bucks could buy a lot back in 1967. It was his magic number, the number he probably figured he needed to quit the terrorism business and go off somewhere to open an Evil bed-and-breakfast.

A lot of people I know have Magic Numbers. A depressingly accomplished 31-year-old friend from college confessed over dinner a few months back that he’s been marching toward $3.5 million ever since graduation. Another, a lawyer at Shearman & Sterling, just told me he thinks about his number “all the fucking time” – but his is $10 million, not $3.5. (This number comes up a lot, 10 million. We’ll get back to that.)

Of course, guys on Wall Street have had magic numbers for years, as necessary fantasies to get them through the long work days and insane pressures and general anomie that come from having a job without meaningful human contact or emotional rewards. “The difference today,” explains James Grant, editor of Grant’s Interest Rate Observer, “is that coming into the Number has become an apparently reasonable expectation.”

Why wouldn’t it be? The bull market, combined with the sudden valorization of all things dot-com, has generated a sociology of spontaneous, freakish wealth. A key part of this sociology is the belief that one can get rich quick. Another is what Alan Greenspan might call numerical exuberance.

An Internet entrepreneur tells me from his downtown office that he has a magic number: $40 million. Rodney Gray, a 33-year-old director of real-estate-capital markets at Price Waterhouse, says he’d like $50 million – enough to retire with a house in Monaco, a ranch in Texas, and an apartment in Manhattan. At Johnney’s Fish Grill, a seascape of blue suits during happy hour, I ask a trio of traders from Lehman Brothers whether they have a number, and if so, what it is. “That’s easy,” says Greg Meyer, a dapper 27-year-old graduate of Dartmouth’s Tuck School of Business. “Ben Franklin.” He means $100 million, of course, not $100 (now, that would be a Dr. Evil moment), and proceeds to limn: “Fifty million in interest-bearing investments, which should conservatively net $2.5 million per year, assuming 5 percent interest rates; the rest is for philanthropy and just having fun.”

This number isn’t just sky-high. It’s I-high, defined by the new extravagant standards of the Internet. The real and paper wealth of cyberspace beneficiaries – those punks! – seems to have awakened every last unemployed ounce of competitive envy in those who toil on the Street. “We think we’re on top of the world,” explains a friend of Meyer’s, who says he’ll be content to call it quits at $3 million. “Then we hear about these guys at eBay who are worth $200 million, and suddenly, we’re not. So now everybody’s working to make the same number as these guys, and that’s really stupid. If I buy a thousand shares of one of these stocks, and I sell them up a quarter, that’s a great trade. But that’s nothing compared to what they’re making. What am I gonna do?”

It doesn’t help, either, that many of these stock-optioned fortunates were former business-school classmates. Underachieving business-school classmates, in some instances. “I did my MBA in 1990,” says Dan Perla, a good-natured 34-year-old who runs his own hedge fund. “And the irony is, the average Joes who couldn’t get jobs consulting or on Wall Street are having the last laughs. Their salaries are still $150,000, but they’ve got thousands of stock options worth millions of dollars in companies like Microsoft and start-up Web ventures.”

The men of my father’s generation – they dreamed about making $1 million after a whole lifetime of work. The fellows of this generation add another zero. Sometimes that’s just the bare minimum. Ten million dollars: Along with 40’s being the new 30 and Thursday’s being the new Saturday, we can toss $10 million’s being the new $1 million into the pile. At Edward Moran Bar & Grill in the World Financial Center, which blossoms forth on warm evenings with unwinding Wall Streeters, I hear this number constantly. According to my friend at Shearman & Sterling, “$10 million is the back-of-the-envelope calculation, assuming the most conservative investments. And adjusting for inflation.” The bottom line is $500,000 annually – just enough to cover the vacations, monthly expenses, and tuition bills for your basic Tuscany-and-Hamptons-going, Fifth Avenue-dwelling, Yalie-bearing New Yorker.

On the other hand, Greg Meyer wants that Ben Franklin so he can sustain at least three homes – one in Europe, one in Florida, and one here – while donating big chunks of his income to the institutions and causes that move him. And the downtown Internet entrepreneur gives an almost metaphysical reason for choosing $40 million: “It’s like being rich squared. If you make 8 percent per year, that’s $3.2 million in interest, then $2 million after you’re finished with Uncle Sam. Two million. That’d be twice as rich as I ever thought I’d be. It’s one thing to make $2 million per year by working your ass off. It’s another to make $2 million for doing nothing.”

So – is this a good thing, Daddy? The answer is probably irrelevant. In The Overspent American: Why We Want What We Don’t Need, Harvard economist Juliet Schor argues that fantasies of idleness and upscale desires have become an undifferentiated part of the American psyche. Her book doesn’t discuss magic numbers, per se. “But I know what you mean,” she confesses. “I have one.”

Rutgers historian Jackson Lears, who’s writing a book about the history of the American idea of luck, does spot one problem: We’re taking the mechanisms that make big, easy money possible – most notably, market levitation – for granted. “All of the old ambivalence and hostility and questioning has pretty much evaporated,” he says. “There’s no suspicion; there isn’t even any ironic distance.”

There has always been a tension in American culture between the champions of grinding, incremental acquisition and the champions of risk. “I think there is an element of excitement, even liberation, in acknowledging the role of chance and celebrating it,” says Lears. “It’s certainly more appealing than plodding diligence, and in some ways more realistic. Life is more interesting than plodding your way up the ladder, one rung at a time. That’s not how it works for most people, and it’s not that satisfying a way to live.”

Ironically, the first generation of dot-commandos didn’t go into the business for the money – or at least not the nine-figure gushers they’ve been hitting lately. Today, if they have magic numbers, they don’t want to retire once they’ve reached them; they want to keep working, keep creating, just at a slower speed. The downtown Internet guru, for example, says he wants to start his own magazine when
he collects his $40 million – if he doesn’t open a couple of restaurants first, or perhaps write a book.

“These people aren’t the types to say, ‘All right, I’m 34 years old, I’m gonna go collect shells,’ ” says Richard Blau, who co-founded a special-event-entertainment company called Chezzam, and whose magic number is $15 million. “They might do it for a little while, but soon they’re going to learn how to sell shells on the Internet.”

That’s basically what happened to Chris Kitze, the founder of Point Communications, a Web directory, which Lycos bought in 1996. “I remember him telling me that he retired to Lake Tahoe,” recalls Henry Blodget, an Internet analyst for Merrill Lynch, “and then, two weeks later, he said, ‘What the hell am I doing with my life?’ Then he founded Now he’s worth 100 times as much.”

Whether the next generation of Net entrepreneurs will be so entrepreneurial remains to be seen. Bo Peabody, the 28-year-old co-founder of Tripod, which Lycos also bought, is skeptical. “What you already see,” he says, “which is so discouraging, is that the people who now get into the Internet industry are doing so for the same reasons they would have gotten into banking five years ago. And they’re bringing that unfortunate culture, which isn’t centered on innovation, quality of product, fun, or vision. It’s centered on money.”

And so the Number game begins anew. “There’s relative envy,” sighs Blodget, “which is: ‘If he’s worth $100 million, then I should be worth $200.’ It’s natural.” If envy is natural, yes. Whether in the Hamptons or in Silicon Alley, your neighbor’s gross, it seems, is always greener.

The Magic Number